Chinese GDP set to cause volatility

19 October, 2016

It's a big day for the Australian markets as Chinese data is set to put pressure on the AUDUSD and also the NZDUSD, but the main focus will most certainly be around the AUDUSD and how it handles the data which is due out today. GDP y/y has always been the cornerstone of how the Chinese economy is performing and the market is looking for a flat result of 6.7%. In recent times the GDP has fallen but it is still one of the best forming in the modern world and a slowdown had been predicted for some time. We also have Industrial Production due out and the market is expecting a slight up lift here, despite recent worries that the industrial sector may be struggling. Regardless of it all Australia's largest trader partner is China, which in turn leads to the likelihood of a large amount of volatility for the AUDUSD and other minor AUD pairs. For me I think the market is looking for a positive result, as the US economy has been picking up and this will have a flow on effect to the Chinese economy. The jitters after the Brexit are also starting to subside and Chinese exporters will be looking optimist around this.

So for the charts the AUDUSD has been bullish in the long run, but has come under renewed pressure from the bears in recent times, as they look to punish the AUD on the back of its weak economy and underemployment issues which I noted yesterday. On the daily chart if we look at the high point from the 4th of August we can see a clear bearish trend in the market when it comes to previous highs and today's touch on the dynamic resistance was no different. We've failed to see sustained pressure on this level and to me it feels like the Chinese data may be the catalyst which finally sees a strong push through for the AUDUSD if we see a strong positive result. Certainly it would be a reversal of a trend which has been in play since August.  If we do see a strong drop on the charts I would anticipate support around the 0.7532 region, but it would be hard going for it to break through completely given the long term bullish trend line which has been in play for some time.

Finally, with all the hype around the AUD and Chinese data the UK is also set to have a big day with the GBPUSD expected to move in the wake of retail data coming out. For me the GBPUSD has come under pressure and some are still saying it's overvalued. One thing is clear and that is any weak retail data will lead to heavy selling in the GBPUSD. While we might see a welcome boost and the GBPUSD even look to break the 20 day moving average,  it feels like it may struggle to sustain that given the amount politicians are talking about Brexit and how easily the market is swaying at present. 

Source link  
Yuan approaches critical level

The trading week kicked off with a panicked sell-off in Chinese equities which simply expresses growing fears in financial markets. Rising U.S...

Gold shines on Italy turmoil

Gold is poised to remain in the limelight this week after aggressively appreciating roughly $18 in a three-hour window. The yellow metal surprised markets...

Fed hike failed to satisfy dollar bulls

Despite U.S. President Donald Trump's dissatisfaction with the Fed's monetary policy tightening measures, the Fed as expected raised interest...

Trump makes mark at United Nations

Although a variety of headlines are circulating following the speech from President Trump at the United Nations, financial market movements are slightly...

Dollar path hinges on Fed dot plot

The U.S. Dollar has enjoyed a robust rally over the past seven months. An economy growing above potential rate, fiscal stimulus, low unemployment...

Risk aversion returns as tariffs take effect

Politics and trade tensions are expected to be the key market drivers this week. President Trump's tariffs on $200 billion worth of Chinese goods...

Investors await China's response

U.S. President Trump moved forward with imposing 10% tariffs on $200 billion of Chinese imports effective next week. Trump's move has obviously...

EM Currencies slide as Dollar appreciates

Emerging market currencies have been treated without mercy by a broadly stronger Dollar, yet again. The Dollar Index appreciated to its highest level this year...

Pound crumbles as UK inflation fails to rise

Repeated signs of easing inflationary pressures in the United Kingdom could plant a seed of doubt among investors about whether the Bank...

In the past 24 hours Bitcoin has lost -1.25% and reached $6456.75348959. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has gained 0.6352% and is now at $1.1587. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 3.13% and is now at $203.685637546. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Daily Forex Market Reviews

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
6FIBO GroupFIBO Group84%